Preservation Institute Blog

Monday, August 25, 2014

Happiness: The Failure of Growth

International comparisons of how per capita GDP affects happiness reveal the same pattern that
we saw in the last two posts about health care and education: economic growth (higher per capita GDP) increases happiness at lower levels of income but stops increasing happiness at a level much lower than what we now have in the United States.

Here is a graph of per capita GDP and people's responses to survey questions asking them how happy they are and how satisfied they are with their lives.

We can see that higher per capita GDP stops increasing happiness at about $15,000 per year, less than half the per capita GDP of the United States.

This result is not surprising. In poor countries, more
income is needed to provide people with decent housing, food, education, health
care, and other essentials; it makes sense that people will become happier as
they can afford more of the necessities and basic comforts of life. But when
people reach about one-half of the average American’s current income, they have
enough to make them comfortable, and there is relatively little benefit to
consuming even more.

Once you have the basic elements of economic comfort, such
as good housing, health care, and education, and you also have some luxuries,
such as music, books, and travel, consuming even more does not bring great
benefits—but it does bring real costs.

Growth continues to cause massive environmental costs even
after it stops bringing significant benefits. There would obviously be less
chance of ecological disruption in the coming century, if nations that were
already economically comfortable tried to achieve the best possible quality of
life rather than the fastest possible rate of economic growth.

Derek Bok, former president of Harvard University,
has written a book summarizing the current research on happiness, and
he sums up the issue we face very neatly when he says:

“If it turns out to be true that rising incomes have failed
to make Americans happier, as much of the recent research suggests,
what is the point of working such long hours and risking environmental
disaster in order to keep doubling and redoubling our Gross Domestic
Product?” (Bok, The Politics of Happiness, p. 63)